Glossary

Batch Settlement

Batch settlement is a crucial process in payment processing where a group of payment transactions accumulated over the course of the business day is finalized and settled collectively. This procedure involves the transfer of funds from the issuing banks of the cardholders to the acquiring bank of the merchant. Typically occurring at the end of the business day, batch settlement ensures that all transactions processed in a batch are collectively authorized, cleared, and funded.

This method is efficient for both merchants and banks, as it consolidates numerous individual transactions into a single operation, reducing the number of individual communication sessions required with banking institutions. It simplifies the financial reconciliation process for merchants because it aligns with their daily business cycles, allowing them to start each new business day with a fresh set of transactions. Additionally, batch settlement can help in managing cash flows more predictably and efficiently, as merchants know when they will receive the funds from the day's transactions. This system is integral to maintaining the smooth operation of electronic payment networks.

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